COMMENTARY: Berlin rejects the EU's multiyear budget, leaves Brussels exposed

Merz says no in Dublin, and Brussels loses its biggest payer

German chancellor Friedrich Merz met, on July 28, 2026, Irish Taoiseach Micheál Martin in Dublin, where Ireland holds the EU's rotating presidency, to tell him that Berlin rejects the current multiyear budget plan of the EU, according to Bloomberg. Merz said he wanted to "conclude these extremely difficult and complex negotiations by the end of 2026," insisting: "these cuts are essential, no matter how far we get on new own resources." When the biggest payer of a budget says no, that is not a technical nuance. It is a budget that no longer exists as written.

Germany is not alone in this position: the Netherlands, Sweden, and Denmark, all net contributors to the EU budget, are also seeking cuts, according to the same source. The precise terms of the compromise Berlin is seeking — exact amounts, targeted line items — are not detailed publicly at this stage.

What Merz said exactly, word for word

A quote that carries more weight than a thousand statements

The German chancellor's phrasing deserves to be read without shortcuts: "We aim to conclude these extremely difficult and complex negotiations by the end of 2026, if possible." This sentence, delivered in Dublin before his Irish counterpart, sets a political timeline — the end of the year — without guaranteeing that timeline will hold, since Merz himself calls the negotiations "extremely difficult."

The second part of the quote is even more direct: "These cuts are essential, no matter how far we get on new own resources." The word "essential" leaves little room for negotiation on the principle of the cuts themselves; it leaves room only on their scale. A chancellor who says "essential" is no longer negotiating the principle. He is only negotiating the pain he is willing to inflict.

The choice of place and timing is never neutral

Choosing Dublin as the backdrop for this declaration is not incidental: Ireland currently holds the rotating presidency of the Council of the European Union, which makes Martin the logical institutional interlocutor to receive this kind of message before it is formalized before all twenty-seven member states. A message delivered to the rotating presidency carries a different weight than one delivered directly to the Commission.

The timing chosen, late July, comes several months ahead of the deadline Merz himself set for the end of the year. This months-long window leaves room for negotiation, but it also signals that Berlin does not intend to wait until autumn to lay out its conditions.

The club of net contributors demanding cuts

Germany is not isolated in its refusal

The Netherlands, Sweden, and Denmark share, according to Bloomberg, the same budgetary concern as Berlin: all pay more into the EU budget than they receive, and all seek, to varying degrees, to reduce their net contribution in the next multiyear financial framework. This informal coalition of net contributors has no official name or single spokesperson, but it weighs, in practice, on the balance of the negotiations to come.

This grouping of similar budgetary interests does not guarantee an identical common position on every line of the budget: each country has its own spending priorities and its own red lines. What these countries do share, however, is the conviction that the current financial framework asks too much of those who, proportionally, finance the most.

What this budgetary front means for net beneficiary countries

Unlike the net contributors, several Central and Southern European member states structurally depend on European transfers to fund entire portions of their agricultural and regional policies. A reduction of the overall budget, if it materializes on the terms Berlin wants, would directly affect these beneficiary countries, whose representatives have not yet publicly reacted in the sources consulted for this dossier.

The European budgetary balance of power is therefore playing out, this week, along a simple but rarely stated axis: those who pay more want to pay less, those who receive more have not yet said what they are willing to lose. A European budget is never negotiated between equals. It is negotiated between those who pay and those waiting to see how much will be left.

What the multiyear financial framework actually represents

An instrument that finances seven years of common policies

The European Union's multiyear financial framework sets, for multi-year periods, spending ceilings for all common policies: agriculture, regional cohesion, research, defense, external aid. Every revision of this framework requires unanimity among the twenty-seven member states, turning every budget negotiation into a high-risk exercise in compromise.

Merz's rejection targets the current plan, meaning negotiations will need to produce a revised version before the intended deadline. Nothing in the available sources specifies whether this rejection applies to the entire plan or to specific budget lines.

The question of the "new own resources" Merz raises

Merz's reference to "new own resources" points to an older European debate over diversifying the common budget's funding sources, beyond national contributions calculated on each state's gross national income. These own resources have, in past European discussions, included mechanisms such as a carbon border tax or a levy on large digital companies.

By stating that cuts remain essential "no matter" the outcome of this debate on own resources, Merz explicitly decouples the question of budget savings from that of new revenue sources, which limits the Commission's room to maneuver in presenting the cuts as temporary while awaiting new revenue.

The defense context complicating the budget squeeze

Italy requests 14.9 billion euros via SAFE the same day

Germany's rejection of the multiyear budget comes the same day that Italian minister Antonio Tajani announced, before the Italian parliament, that Rome will request 14.9 billion euros through the EU's SAFE instrument (Security Action for Europe) by year's end, according to Reuters. Defense minister Guido Crosetto specified that these funds will go toward already-budgeted projects, not new spending.

SAFE is a loan instrument, distinct from the classic multiyear financial framework, meaning Italy's request does not directly clash with Germany's rejection of the common budget. But the two files together illustrate the same tension: Europe wants to spend more on its defense at the exact moment its biggest contributors want to spend less on everything else. You never fund a rearmament by cutting the budget that makes it possible. You fund it by choosing, every time, what you are willing to sacrifice elsewhere.

Italy's League wants to keep control over the SAFE funds

The Italian League party, through Claudio Borghi, states that the Italian parliament "will have the final say" over the use of the SAFE funds requested by Rome, according to a secondary source consulted for this dossier. This insistence on national parliamentary control illustrates a broader distrust, present in several European capitals, of financing mechanisms decided in Brussels.

This national parliamentary distrust echoes, on a different level, the German position: in both cases, national political actors want to reclaim more direct control over EU budget decisions perceived as too centralized.

The Russia sanctions package that also costs money

Sixteen hundred companies targeted, a political and financial cost

On the same July 28, the European Union is preparing, according to a separate Bloomberg report, the largest sanctions plan ever drafted against Russia, targeting more than 1,600 companies, with combined revenue exceeding 20 billion U.S. dollars. Adoption of this package will require, like any EU sanctions decision, unanimity among the twenty-seven member states.

This sanctions package does not fall directly within the multiyear financial framework Merz contests, but it illustrates the same underlying logic: every major European file this week — defense, sanctions, budget — requires an increasingly difficult unanimity among twenty-seven governments with diverging budgetary priorities. This required unanimity is precisely what makes Germany's position on the budget so structurally decisive.

The EU's top diplomat faces a heavy agenda

Kaja Kallas, the EU's foreign policy chief, is simultaneously carrying the Russia sanctions file and, indirectly, the pressure on common finances that must sustain aid to Ukraine and broader European defense. This dual burden illustrates the difficulty of advancing on several European financial fronts at once, as the main payers announce they want to reduce their contribution.

Nothing in the sources consulted allows for a direct link between Merz's budget rejection and the sanctions timeline, but both files share the same European negotiating room and the same unanimity constraint. Brussels can sanction Moscow and cut its own budget the same week. Both decisions cost unanimity, a resource scarcer than money.

Merz and Germany's domestic political context

A cabinet reshuffle days before Dublin

Merz's firm budgetary stance in Dublin comes on the heels of a cabinet reshuffle announced days earlier, according to Euronews. This context of internal government reorganization gives added political weight to the chancellor's posture on the European stage: a government that has just reorganized itself often seeks to demonstrate firmness on external files.

This calendar coincidence between an internal reshuffle and European budgetary firmness proves no direct cause-and-effect link, but it illuminates the political context in which Merz chooses to hold a hard line on the multiyear budget rather than seek a quick, discreet compromise.

Pressure from German public opinion on European spending

Germany has, for decades, remained one of the largest net contributors to the EU budget in absolute terms, which regularly fuels a domestic debate over the proportionality of this contribution relative to the benefits perceived by German citizens. This domestic debate is not documented in detail in the sources available for this specific week, but it forms the political backdrop against which Merz's statement is made.

A chancellor who insists on "essential" cuts is speaking, in part, to this domestic opinion as much as to his European counterparts gathered in Brussels or Dublin. A European budget speech is always delivered to two audiences: the one negotiating across the table, and the one watching from Berlin.

What Germany's rejection concretely changes for Brussels

A Commission that must revise its proposal without its biggest financial ally

The European Commission, which presented its initial multiyear financial framework proposal, now faces an explicit refusal from its historic largest net contributor. This refusal does not mechanically block the entire process, since European budget negotiations always proceed through successive adjustments among member states, but it removes a base of support previously considered relatively secure.

Without German backing for the initial plan, the Commission must now deal with at least four governments — Germany, the Netherlands, Sweden, Denmark — demanding cuts, which substantially changes the balance of power in the negotiating room. This shift in balance of power could delay final adoption beyond the year-end deadline Merz himself targeted.

The risk of a last-minute deal under pressure

European budget negotiations have, in the past, often been resolved in the final weeks before a deadline, under calendar pressure that pushes member states toward quick and sometimes poorly detailed public compromises. This recurring pattern could repeat itself this time, if Merz maintains his end-of-2026 deadline despite the complexity he himself acknowledges in his Dublin quote.

Nothing guarantees, at this stage, that this last-minute compromise will satisfy both the net contributors demanding cuts and the net beneficiaries who depend on current transfers. A last-minute budget compromise never resolves a disagreement; it postpones it, dressed up as a solution, until the next financial framework.

Negotiations that have dragged on for decades

Every negotiating cycle of the European multiyear financial framework, since the instrument's creation, has seen similar tensions between net contributors wanting to limit their burden and net beneficiaries wanting to preserve their transfers. This structural tension is therefore not unique to 2026; it is built into the very architecture of a common budget unequally financed by twenty-seven very different economies.

What potentially sets this cycle apart is the simultaneity with heightened defense pressure — Italy requesting billions via SAFE, Ukraine continuing to need sustained financial support — which makes the cuts demanded by Berlin harder to justify without sacrificing security priorities that Germany itself otherwise supports.

The paradox of a Germany that cuts and rearms

Germany has, in recent years, committed to a significant rearmament of its own conventional forces, while simultaneously demanding cuts to the common European budget that partly finances collective aid to Ukraine and certain shared defense programs. This apparent paradox is explained by a German preference for national funding of its own defense rather than pooled funding at the European level.

This preference for national control over pooling echoes the League's position in Italy on SAFE funds: in both cases, governments want to finance their defense without ceding political control of that money to centralized European bodies. Europe is rearming, but every capital wants to keep a hand on its own checkbook. That may be the real defense doctrine of this continent in 2026.

The expected reaction from European institutions

The European Parliament faces a budget already contested before adoption

The European Parliament, which must jointly approve the final multiyear financial framework with the Council, finds itself facing a text contested even before beginning its own thorough review. This early contestation by a member state as central as Germany complicates the task of parliamentary rapporteurs tasked with building a viable interinstitutional compromise.

No official reaction from the European Parliament is recorded in the sources consulted for this dossier as of writing, which makes it impossible to anticipate the position the institution will adopt regarding Germany's rejection.

The Irish presidency in a delicate mediating role

By receiving Merz in Dublin, Taoiseach Micheál Martin finds himself, by virtue of Ireland's rotating presidency, in a position of potential mediator between the German position and that of other member states, though the sources consulted do not detail the precise response Martin gave to the German chancellor's statement. This mediating role will weigh on the coming months of the Irish presidency, which will need to manage this budget file through to its conclusion or the handover to the next presidency.

Ireland, itself a historic beneficiary of several European programs, must handle this mediation with particular caution, given its own past dependence on European transfers that it now defends as a neutral presidency. Presiding over the Union sometimes means defending, quietly, the opposite of what you yourself once received to build yourself up.

What this file reveals about European budgetary fragmentation

A Union moving at several financial speeds

The combination, in a single week of late July 2026, of a German budget rejection, an Italian defense-funding request through a separate instrument, and a Russia sanctions package requiring separate unanimity, illustrates a financially fragmented European Union running on several parallel tracks rather than a single, coherent common budget.

This fragmentation, documented by the simple juxtaposition of these three distinct files, complicates the overall reading of European budget policy for anyone seeking a single, simple view of "what Europe spends" during this specific period.

The risk of prolonged decisional paralysis

If every major European financial file — the common budget, defense instruments, economic sanctions — requires its own separate unanimity among twenty-seven governments with diverging priorities, the risk of prolonged decisional paralysis mechanically rises with every new bilateral disagreement between major capitals.

This risk is not hypothetical: it is already documented by the history of previous European budget negotiations, which have often required months, even years, of wrangling before reaching a final compromise acceptable to all parties. Twenty-seven separate unanimities do not make a stronger Union; they make twenty-seven distinct chances to block everything.

The possible consequences for European aid to Ukraine

A tighter budget could weaken continued financial support

The European multiyear financial framework funds, among other items, part of the Union's continued financial support to Ukraine amid the ongoing conflict with Russia. Significant budget cuts, if they materialize on the terms Berlin wants, could, in theory, affect the EU's ability to maintain its current level of financial support to Kyiv over the course of the next multiyear framework.

No source consulted for this dossier specifies whether the cuts envisioned by Merz would specifically target budget lines linked to Ukrainian support, or whether they would instead fall on other common spending items. This uncertainty deserves to be flagged without being filled in by an undocumented extrapolation.

Budgetary pressure that says nothing about actual political support

It would be wrong to conclude, from Merz's budget rejection alone, that Germany would reduce its overall political and military support for Ukraine: the chancellor has otherwise maintained a firm line toward Russia on other European security files documented this same week. The budget rejection concerns a shared financial architecture, not necessarily the intensity of German national support for Kyiv, which can continue to flow through bilateral channels distinct from the European multiyear framework.

This distinction between common budgetary rigor and maintained bilateral support deserves to be preserved to avoid any excessively pessimistic reading of a file that, for now, remains above all a financial negotiation between member states. Cutting a common budget does not erase bilateral support. It only shifts the question of who, exactly, will keep paying for what.

The European political calendar through year's end

Several deadlines stack up before December 2026

The year-end deadline set by Merz for concluding budget negotiations coincides with other already-heavy European institutional calendars, notably the hoped-for adoption of the sanctions package targeting the 1,600 Russian companies, with a ministerial meeting targeted for October 2026. This stacking of calendars imposes on European institutions a burden of simultaneous negotiation on several high-tension political files.

Managing these negotiations in parallel, with the same finance ministers and foreign ministers often mobilized on several files at once, increases the risk of cascading delays if any one file takes longer than expected to resolve.

What a negotiating failure before the deadline would mean

If budget negotiations fail to reach a compromise before the end of 2026 as Merz hopes, the European Union might need to resort to mechanisms for temporarily extending the existing financial framework, a solution already used in the past during similar deadlocks. This temporary extension, if it materializes, would prolong budgetary uncertainty for all programs funded by the common European budget.

Neither Merz nor the Commission have, according to the available sources, publicly raised this extension scenario as an option under consideration at this stage of negotiations. A budget extended by default is never a chosen budget; it is a budget one endures, for having failed to negotiate another one in time.

What this budgetary week says about the Union's real balance of power

Economic weight continues to dictate political weight

Germany's ability, on its own, to derail the adoption timeline of a multiyear financial framework illustrates, once again, the disproportionate weight the largest net contributor retains in European budgetary power dynamics, despite the formal principle of equality among member states enshrined in the treaties. This real economic weight never fully disappears behind the legal equality proclaimed by the Union's founding texts.

The Netherlands, Sweden, and Denmark, by joining the German position, reinforce this balance of power without individually holding the same weight as Berlin in the negotiations ahead.

What smaller member states can still hope to obtain

Smaller, net-beneficiary member states retain, despite this unfavorable balance of power, a theoretical blocking power through the unanimity mechanism required for final adoption of the multiyear financial framework. This blocking power remains, for now, an unplayed card in the sources consulted for this dossier, but it could become decisive if the cuts proposed by Berlin prove too severe to accept without substantial compensation.

The negotiation now opening, or rather hardening with this Dublin statement, will pit a clear economic balance of power against an institutional mechanism that, formally, gives every member state an equal veto right. Unanimity protects small countries on paper. In the negotiating room, it protects only those who know how to use it until the last day.

What Merz risks politically at home if he fails

A bet that stakes his European credibility as much as his national one

By personally setting the year-end deadline and calling the budget cuts "essential," Merz stakes his own political credibility on the final outcome of these negotiations, both with his domestic public and with his European partners who will watch whether he keeps his word. This personal commitment turns a technical budget file into a test of Merz's ability to impose his priorities on the European stage.

A failure to secure the announced cuts, or a compromise perceived as too weak by his domestic public, could weaken Merz's position at the very moment he has just carried out a cabinet reshuffle meant, in part, to consolidate his governing authority. This domestic political risk adds further pressure to negotiations the chancellor himself already calls complex.

What the success or failure of this bet would mean for the Union

Beyond Merz's own political trajectory, the outcome of this budget file will determine, for at least the next seven years, the scale of financial means available to the European Union to fund its common priorities, from agriculture to defense to continued support for Ukraine. This long-term scope far exceeds the narrow national political calculation of any single head of government involved in the negotiation.

That may be the true stake of this budgetary week: beyond individual egos and national electoral calendars, a Union that must collectively decide what it is still willing to fund together. A European budget is never just an arithmetic sum. It is the only concrete proof of what twenty-seven countries still agree to do together.

Brussels exposed, but not alone

Merz said no in Dublin, and that no strips Brussels of one of the financial pillars it counted on to close its next multiyear framework. This no is not isolated: it comes with a quiet but real chorus of net contributors who, from the Netherlands to Denmark, are demanding the same thing. The Union's budget for the next seven years will therefore be negotiated under a balance of power the treaties had not anticipated with this intensity.

What this week revealed, more than a simple budget disagreement, is a Union that must rearm, sanction, and support Ukraine with a budget that its biggest payers want, right now, to reduce. You never build a common defense with a budget you cut at the same time you demand it. Sooner or later, you choose which of the two ambitions you are truly willing to fund.

Signed Maxime Marquette, columnist

Columnist's Transparency box

Editorial positioning

This commentary adopts a critically pro-European line, documenting real budgetary tensions without minimizing their potential consequences for collective support to Ukraine and common defense. It does not take sides between the national positions involved, but underscores the structural risks of a financially fragmented Union.

Methodology and sources

This text relies exclusively on the fact dossier compiled for this editorial series, limited to the window of July 27-28, 2026, and on the primary and secondary sources listed there, including related blocks on European defense funding and Russia sanctions. No information outside this dossier has been added.

Nature of the analysis

This is a commentary of political and budgetary analysis, not an official account of European negotiations. Extrapolations about possible consequences for Ukraine and for smaller member states remain interpretive hypotheses, explicitly presented as such.

Sources

Primary sources

Bloomberg — Merz rejects EU budget plan, pushes for compromise by year-end — July 28, 2026

Reuters — Italy to use EU's SAFE scheme to fund defence spending, foreign minister says — July 28, 2026

Secondary sources

Euronews — German chancellor Friedrich Merz announces cabinet overhaul — July 24, 2026

KFGO — Italy's League says parliament will have final say on EU defence funds — July 28, 2026

Liga.net — EU summons Russia's representative over drones in Romania and the strike on the Latvian consulate — July 28, 2026

NV.ua — EU plans to sanction 1,600 companies tied to Moscow — July 28, 2026